LVMH Buys Majority Stake of Italy’s Premiere Cashmere Maker

LVMH Moet Hennessy Louis Vuitton agreed to buy 80% of Loro Piana SpA, one of the premier textile producers in Italy, for US $2.57 billion. The family owners, however, will retain the remaining 20%.

Known for its thousand dollar cashmere sweaters, Loro Piana is projected by LVMH to generate sales of Eur 700 million by the end of 2013. The acquisition will also help defray the deceleration in sales of its Louis Vuitton brand as the company reported lackluster sales in fashion and leather goods in 2012.

"I am convinced that our group will prove a good home in realizing the significant future potential of Loro Piana," Bernard Arnault, the CEO of the Paris-based LVMH, said in a Bloomberg report.

But analysts claim that it's not going to be easy since Loro Piana will be competing in the cutthroat luxury market, which is seen to expand five percent in 2013 buoyed by the rising demand in Southeast Asia.